OPINION: How About Accountability Beyond Borders?

By Carl Middleton

The arrival of the ASEAN Economic Community in December 2015 marked a major milestone in the ambition of the countries of the region to become closer to one another through economic cooperation. It anticipates economic growth, and with it a growing role for large transnational and domestic corporations, as well as for smaller businesses.

Economic growth through regionalization is a two-sided coin. It could bring jobs, increase incomes, and grow state revenues for beneficial public services such as health and education. But, when pursued recklessly, it could result in harm – including labour rights violations, dispossession of land and natural resources from communities, corruption and bribery, and environmental degradation.

Unfortunately, the latter is all too common in ASEAN to date. Scanning the headlines of the region’s newspapers reveals a litany of economic projects that result in social and environmental harms. Land concessions in Cambodia and special economic zones in Myanmar result in landgrabbing. Hydropower dam construction in Laos leads to river degradation and poorly planned community resettlement schemes. Labour rights violations have been flagged by the EU and US in Thailand’s seafood industry, and the list goes on.

As ASEAN’s economic integration deepens, it is the responsibility of governments and businesses to anticipate and avoid such social and environmental harms and human rights violations. Where they fail, they should be held accountable and action taken to swiftly remedy the situation.

CSR vs Corporate Accountability

Over the past decades, there has been a growing focus on the responsibility of business towards society both globally and more recently, in ASEAN. Some have proposed various shades of Corporate Social Responsibility (CSR), whilst others have argued in favour of Corporate Accountability.

How does Corporate Accountability differ from the more well-known concept of CSR? Whilst CSR relies on voluntary commitments, Corporate Accountability is defined as responsibilities written as law and thus enforceable through the justice system when necessary.  It renders social and environmental responsibility an obligation, rather than an option.

CSR itself is evolving, at least among progressive businesses. Early understandings of CSR proposed that business should contribute philanthropically towards society, as a form of charity. This has evolved to a recognition that business requires a “social license” to operate, meaning that not only must they give back to society, but they must also earn their profit responsibly.

Whilst well and good, many businesses operating in ASEAN are yet to seriously take up CSR. There has been some progress, including the creation of the ASEAN CSR Network, various studies by academics, governments, civil society, and business itself, and increasingly regular trainings and meetings. Yet, too often, business still privileges single-mindedly the pursuit of profit.

This should not be a surprise. The foundation of most ASEAN countries’ development model is predicated on cheap labour and environmental exploitation by both domestic and foreign investors. The main policy message is that of “grow first, clean up later.” It emphasises the quantity of economic growth over its quality, which would require the co-consideration of public goods such as health, education, and a clean environment alongside economic growth.

It is a truism that companies should follow national law. Indeed, over time, laws on social and environmental protection have incrementally strengthened across the region. Unfortunately, however, the completeness of law remains highly uneven between countries, and its enforcement often patchy. Many loopholes exist, and governments sometimes turn a blind eye to human rights violations or environmental harms, prioritizing economic growth instead.

A particular challenge relates to cross-border investments, when the laws and their enforcement in the host country of a project are weaker than that of the home country of the investor. This leads to a situation where projects are built by companies at a quality that would not be permitted in their own country.

For example, stronger environmental regulations and growing community protests in Thailand resulted in the temporary suspension by the Supreme Administrative Court in 2009 of 65 projects worth US$8 billion into the Map Ta Phut industrial estate. Most investments eventually went ahead, but in the process Thailand’s first ever Health Impact Assessment was undertaken and institutionalised. At the time of this controversy, a new major industrial estate 10 times the size of Map Ta Phut had been approved in Myanmar by the military government near the town of Dawei, with the main project proponent being a large Thai construction company. Referring to Dawei in late 2010, Thailand’s then-Prime Minister was quoted as stating: “Some industries are not suitable to be located in Thailand. This is why they decided to set up there.”

Of course, much investment from wealthy European countries, Japan and the United States into ASEAN since the 1980s – including at Map Ta Phut - had followed a similar, tragic logic!

Accountability across borders

A myopic view of economic growth at-all-cost undermines the long-term stated objectives of the region’s governments towards a people-centered, inclusive and sustainable ASEAN. For a shift from an approach emphasising the quantity of economic growth towards one emphasising quality, greater Corporate Accountability is needed.

Over the past decade, globally, the debate over businesses’ accountability towards society, including towards human rights, has been reinvigorated. In 2011, the UN Human Rights Council endorsed the Guiding Principles on Business and Human Rights, based upon the “protect, respect, remedy” framework of Prof. John Ruggie. It states that governments must protect human rights, businesses must respect human rights, and both must remedy human rights violations where they have occurred.

Whilst they do not quite affirm that businesses have direct legal obligations towards international human rights treaties, under the Guiding Principles businesses are expected to be able to demonstrate that they comply with applicable laws (where they exist), and that their operations do not have an adverse impact on human rights – even if national laws do not exist. It is also businesses’ responsibility to be aware if the government of the country in which they are investing fails to protect human rights, and to not act in complicity with them.

States, meanwhile, must protect human rights including through ensuring that laws and policies are complete, coherent and enforced. States should consider how businesses operating from their territories may have effects on the enjoyment of human rights in other countries – the so-called “extraterritorial obligations.” Yet, until now most governments in Southeast Asia have interpreted their human rights obligations as mainly applicable only within their own borders.

The creation of the ASEAN Intergovernmental Commission on Human Rights (AICHR) in October 2009 was a step forward. But whilst its regional scope has the potential to further extra-territorial obligations, its operation in practice has been challenged by the divergent commitments between member governments to the complete body of international human rights law. Thus, AICHR has focused principally on its role to promote human rights, which has included the publication of a study on CSR and human rights. Civil society has cautiously supported AICHR, whilst critiquing how its lack of a protection mandate makes it unable to investigate alleged rights violations by state and business within ASEAN.

National Human Rights Institutions have also expressed an interest in furthering extraterritorial obligations.  In October 2014, five National Human Rights Institutions in Southeast Asia together with 11 civil society groups signed the ‘Bangkok Declaration on Extraterritorial Human Rights Obligations’. The Thai National Human Rights Commission has investigated several cases in neighbouring countries that have involved Thai businesses, including the Hat Gyi Dam and the Dawei Special Economic Zone in Myanmar, the Xayaburi Dam in Laos, and several large sugarcane concessions in Cambodia.

No silver bullet

There is no silver bullet for transforming ASEAN’s economy towards one that is more inclusive, just, and sustainable. Its structure and governance at present provides too many opportunities for at best misguided – or at worse unscrupulous – pursuit of profit that risks undermining people’s livelihoods, health, and human rights. Government, business, civil society and citizens must all act to transform this economic system and its goals.

A greater focus on a human rights-based approach to Corporate Accountability is an important point of departure. Corporate Accountability should not be understood as displacing CSR initiatives where they are well done, but as providing a firm foundation and a minimum set of standards to be built upon. Thus, governments – with the backing of business, civil society, and citizens – need to ensure that better environmental and social regulations are in place, that enforcement is improved, and that the justice system is accessible and trusted.

As economic integration deepens and investments flow more readily across borders in ASEAN, Corporate Accountability should too. Deepening the recognition of and commitment to extraterritorial obligations would help protect human rights and bring closer to reality the formation of an inclusive, fair and sustainable ASEAN.

Acknowledgement

This opinion piece was originally written for the ‘Reporting ASEAN: 2015 and Beyond’ and was published on 19th April 2016: http://www.aseannews.net/asean-accountability-beyond-borders/. The Center for Social Development Studies gratefully acknowledges permission to republish the article.

Author bio

Dr. Carl Middleton is a lecturer on the MA in International Development Studies program (www.maids-chula.org) and Deputy Director for International Research in the Center for Social Development Studies (www.csds-chula.org) in the Faculty of Political Science, Chulalongkorn University, Thailand. He can be contacted at carl.chulalongkorn@gmail.com.